[Chiptalk] "Align Everything with TSMC" Japan Kumamoto's Land, Sea, and Air Grand Operation

Factory Completion by Year-End, One Year Left Until Mass Production
Expansion of Transportation Infrastructure Including Air, Maritime, and Land Routes
Emerging as a New Semiconductor Trade Hub

As the world's largest foundry (semiconductor contract manufacturing) company, Taiwan's TSMC, nears the completion of its factory, the entire area near Kumamoto Prefecture in Japan is accelerating the construction of basic infrastructure to support the factory. From the completion of the factory at the end of this year until the start of mass production, which will take about a year, efforts are focused on establishing related infrastructure for air, sea, and land transportation to ensure TSMC can carry out the necessary preparations for semiconductor production without any issues. The relatively quiet suburban area of Kumamoto Prefecture is emerging as Japan's new semiconductor trade hub.

[Image source=Reuters Yonhap News]

According to the Nihon Keizai Shimbun (Nikkei) on the 20th, Japan Airlines (JAL) will begin handling international cargo at Kumamoto Airport starting next month. Entrusted by Taiwan's China Airlines, the number of cargo flights between Kumamoto and Taipei, the capital of Taiwan, will be doubled to four flights per week from December. Japan Airlines has prepared by setting up a temporary warehouse on the Kumamoto Airport premises and introducing an electronic customs clearance system.

Prior to Japan Airlines, ANA Cargo, a subsidiary of All Nippon Airways (ANA) Holdings, began international cargo operations at Kumamoto Airport last month. Utilizing flights between Kumamoto and Haneda, it connects various parts of Japan via Haneda and Narita airports. It is reported that ANA Cargo can load cargo in Taipei at 6 p.m. and have it arrive by noon the next day.

Last month, Kumamoto Prefecture formulated a 'Great Airport' plan to solve TSMC's logistics issues. This measure aims to strengthen regional industrial power by establishing a semiconductor industry near the airport. According to Nihon Keizai, this is the third time Kumamoto Prefecture has directly created and organized such a plan related to the airport, following the expansion of international flights in 2008 and disaster prevention measures after the 2016 earthquake.

The reason Kumamoto Prefecture is rushing to expand air logistics infrastructure is because TSMC's factory is scheduled to be completed by the end of this year. TSMC announced the factory construction plan in November 2021 and began construction in April of the following year. After completing the factory by the end of this year, TSMC plans to spend one year bringing in equipment and other preparations, aiming to start full-scale mass production by December next year. During this process, equipment and chemicals must be transported to the factory without disruption, and preparations are underway to ensure that related personnel from Taiwan can easily settle locally.

Not only air routes but also sea routes are being opened to receive logistics from Taiwan necessary for TSMC factory operations.

According to reports, Kiichi Matsuki, chairman of Matsuki Transport, which is responsible for the maintenance and utilization promotion of Yatsushiro Port located south of Kumamoto Prefecture, requested in September that the prefecture adjust the depth of shipping lanes to allow large vessels to enter, increase container handling capacity, and develop new routes. Matsuki Transport received permission from the prefecture in June to install a high-pressure gas storage facility for semiconductors and has been preparing for inspection and transportation of high-pressure gas import containers. Since TSMC is likely to import chemicals from Taiwan when mass production starts at the end of next year, preparations are being made accordingly. Nikkei reported that Yatsushiro City has reduced the transportation time for cargo imported from Kaohsiung, Taiwan, from the original nine days to four days through consultations with related companies since August.

TSMC Semiconductor Factory in Kumamoto, Japan
[Image Source=Yonhap News]

In addition to air and sea, Kumamoto Prefecture is also working on road maintenance. Kikuyo Town, where the TSMC factory will be located, also hosts factories of Japan's Sony and Tokyo Electron, with about 10,000 workers commuting daily. As a result, the entire nearby road network experiences severe traffic congestion during rush hours due to a sharp increase in vehicles. With nearly 2,000 additional workers expected to be employed at the TSMC factory, worsening congestion is inevitable, making improvements necessary. The prefecture plans to expand the two-lane road near the main gate of the TSMC factory to six lanes.

Moreover, Kikuyo Town built a comprehensive gymnasium last month to serve as a disaster prevention base in case of earthquakes or other disasters. The gymnasium can accommodate 850 people during emergencies. Considering that many Taiwanese residents will live in the area, some local governments such as Koushi have established multicultural coexistence councils to prepare support for foreign residents' daily lives.

Nikkei reported that "Kumamoto Prefecture is modeling the new Taiwanese Hsinchu Science Park, which has transportation infrastructure, schools, hospitals, and other living facilities centered around the factory." To this end, key figures from Kumamoto Prefecture visited Hsinchu in January to observe the infrastructure development status.

Japan is aiming to establish itself as a key country in the semiconductor supply chain and promote regional economic development by attracting the TSMC factory with large-scale government support. Kyushu Financial Group forecasts that the entry of TSMC into Kumamoto Prefecture will cluster semiconductor-related industries, generating an economic effect of 6.9 trillion yen (approximately 59 trillion won) over ten years.

Meanwhile, real estate prices in Kumamoto Prefecture have risen significantly since the announcement of the TSMC factory construction. Housing prices in Kikuyo Town, Kumamoto, where the TSMC factory will be located, increased by 21.6% in September this year, showing a double-digit rise. Rental prices around the TSMC factory have also increased by about 20% over the past two years.